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Monday, 14 April 2014

Dyman Associates Insurance Group of Companies: 5 Features That Can Spike Your Home Insurance Costs

When shopping for a new home,
some of the same features that lure you in could end up costing you extra in
insurance premiums.

If you’re like the many buyers
who wait until after going into contract to get insurance quotes on a property, you could be
faced with some serious sticker shock. Check out these five seemingly desirable
home features that might end up costing you more than you realize in the long
run:

1.
Swimming pools

Because of both the high rate of
drowning and the severity of water-related injuries, insurance companies
consider swimming pools one of their biggest liabilities. Consider the
possibility of a neighborhood kid accidentally falling into your pool and
sustaining an injury. You could be held liable for the high cost of their
hospital bills, and if they choose to sue, you could also rack up considerable
lawyer fees and other court expenses.

Most standard homeowners insurance policies include
a minimum liability coverage limit of $100,000 in order to help protect you
financially in the event of such a lawsuit. However, if your home includes a
swimming pool, the Insurance Information Institute recommends increasing your
limit to at least $300,000 or even investing in an umbrella policy to increase
your liability coverage.

Your insurer will also likely
require you to build and maintain a self-locking fence around the pool to keep
others – especially children – out. Additionally, if the pool itself is
expensive, you may need to increase coverage limits on your policy in the event
it’s damaged by a storm or other covered peril.

2.
Trampolines

Nearly 100,000 trampoline-related
incidents are reported every year, according to a survey by the US Consumer
Product Safety Commission’s National Electronic Injury Surveillance System.
While the kids may love it, a new trampoline almost certainly won’t play well
with your insurance company. Depending on your state and your specific carrier,
trampoline-related claims may be excluded from your policy. That means if
someone is injured on a trampoline on your property and decides to sue, you
might be paying the legal costs out of your own pocket.

Even if there are no specific exclusions
from your carrier or in your state, it’s still important to notify your agent
any time you introduce a “high-risk” item – such as a trampoline, tree house or
a swimming pool – to your property to make sure you’ll be properly covered in
the event of an accident.

3.
Water view

The value of a waterfront
property can be substantially higher than comparable inland properties, whether
you live by an ocean, lake, river or some other body of water. However, a
beautiful water view often comes with a higher risk for flooding and therefore
more extensive insurance coverage.

Although most standard homeowners
and renters insurance policies include coverage against water damage, they
exclude any damage resulting from flood/rising water. For that reason, most residents
who live in high-risk flood zones with a water view typically need to invest in
separate flood policies in order to protect their properties from the elements.
If you have a mortgage on your home, a flood insurance policy will likely be
required by your lender. You can check the flood risk of any property by
visiting the official site of the National Flood Insurance Program.

4.
Vintage charm

Some older homes have maintained
original features for decades or even longer, and discovering a well-preserved
historical property can be a real estate dream come true. Unfortunately, if key
features such as the home’s plumbing system, electrical system or the roof
haven’t been updated since poodle skirts were in style, it’s likely an
insurance nightmare.

If your electrical system hasn’t
been updated in more than 10 years, it’s more likely to malfunction and
contribute to a damaging fire than one that’s brand new. Similarly, out-of-date
plumbing systems could lead to devastating water damage and an older roof is
more susceptible to storm damage and other costly damages. With the combined
average cost of claims topping $40,000 for these perils, according to the
Insurance Information Institute, it’s not surprising insurance carriers charge
more to insure these properties.

5.
Square footage

Bigger is not always better. The
larger your home, the more it will likely cost to replace if it’s ever damaged
or destroyed in a covered peril. That means you’ll require a higher amount of
dwelling coverage, which is the coverage provided under your homeowners policy
to rebuild the structural elements of your home in the event of a claim.

To get a rough idea of how much
dwelling coverage you’d need to completely rebuild your home from the ground up
after a total loss, insurance companies multiply the total square footage of
the property by local construction costs. Keep in mind, building with more
expensive construction materials will impact your coverage needs, so upgrades
such as granite countertops also should be reported to your insurance company.

Of course, none of this should
dissuade you from buying a waterfront home or installing a swimming pool. Just
be sure you enter into the home buying experience with some knowledge about
which types of homes carry higher risk — and therefore larger insurance price
tags — than others.